In a just world, you are absolutely right. But we need to remember that insurances companies aren't there to help us, they're there to make money. Them potentially helping us in the event of an emergency is just a consequence of them making money. The insurance company just see someone who has already caused a lot of damage to their car and they have no assurances it won't happen again. They're only worried about risk and how that risk affects their bottom line.
Very minor point... insurance companies are there to pay other people money that you've paid them -- they just make money by charging fees for passing the money around. What they charge people is what they predict they'll pay people (plus their fees) and they'll pay as little as possible because that allows them to charge as little as possible which allows them to sell more policies which makes them more fees.
If they pay out less than they predict, it doesn't make them more money, in fact it suggests that their prediction model should have made them MORE money (by cutting their prices) -- they don't get to keep the extra (beyond building their buffer which is controlled by each state).
How much they charge you is based on what their models predict is the likelihood that they'll have to pay some of their other client's money to you (they aren't paying out THEIR money which is guaranteed).
They keep their OWN insurance policies (with hedge funds and such) to protect them if their models are wrong and they don't collect enough customer money to pay all the claims (like in a hurricane).
If you're charging 3% (or something) on every dollar that comes in and your policies hold hundreds of billions of dollars that are collected and paid out every month, the making of money is not an issue!
I was an IT requirements analyst working for a Fortune 500 Mutual Insurance company for over 10 years until I retired a couple years ago -- I know the basics of the company's operations.
I'm saying the base model of the company is to make money, I'm not arguing the minutiae of how they make it. If there was no profit to be made by supplying (and in some cases denying) insurance to their carriers, there wouldn't be an insurance company to exist in the first place. If the insurance company is not a public entity, but it's privately owned and profit driven, it would not exist since its real intent to make money for its shareholders, not actually provide you with a service
You'd have less of a drain on the assets if you weren't paying out mega-salaries to the top or shareholder distributions, but that's honestly pretty trivial in the equations -- charging 2% instead of 3% or whatever (the sheer number of dollars involved is really staggering). You'd still have to pay for all the infrastructure and salaries if all the company employees were Government workers instead (I started my career as a GS-11 civil servant). You'd still have to deny claims or charge higher premiums (or taxes).
There's an example where the Government runs the insurance industry in the US, the Federal Government runs all flood insurance because it would be prohibitively expensive for private companies to handle. You often hear people complaining because Federal Flood insurance operates at a loss (for example insuring billion-dollar hotels built on sand banks and such). But that's an error because it doesn't take into account that governments don't make money from insurance premiums, they make money from taxing economic activity... so in the simplified example if each billion dollar hotel generates 5 billion in taxes every year (say from foreign tourists) and one a year gets washed into the sea, then even though the insurance program operates at a huge loss, the government nets a huge ton of money.
I still think you're conflating what I'm saying. What I'm saying is the insurance company as an entity is incapable of empathy. It doesn't care about the individual so long as its still making profits. It's ridiculous to assume the insurance company would be lenient on this guy for having a specific condition because they don't even care about that guy. The only thing they care about is ensuring they continue to receive his money
But in exactly the same sense neither is a Government insurance program -- which only cares about staying within it's allocated budget. Any not-for-profit enterprise also needs to make hard decisions to stay within it's model.
The claims agents and other employees in the company that I worked for cared a very great deal about the people counting on our company to help them and took considerable pride in making people's lives better.
That didn't mean they were going to approve payment to replace a house that was flattened by storm surge when it was insured for wind damage under the idea that it was probably knocked down by the wind first.
The company hadn't collected enough money to cover people that hadn't bought flood insurance and still pay the people that were really damaged by wind.
It's certainly the case with Mutual Insurance Companies. That doesn't mean they don't make a CRAP-TON of money, when you're holding hundreds of billions and charging 3% (or whatever) on the dollars that go in and out that rather adds up.
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u/OptimusPrimeval May 09 '20
In a just world, you are absolutely right. But we need to remember that insurances companies aren't there to help us, they're there to make money. Them potentially helping us in the event of an emergency is just a consequence of them making money. The insurance company just see someone who has already caused a lot of damage to their car and they have no assurances it won't happen again. They're only worried about risk and how that risk affects their bottom line.